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Labour Market Policy

In: Business and Management

Submitted By AlexandraMolines
Words 2231
Pages 9
| Labour Market Policy – 5BUS1035 | “The imposition of a minimum wage level may be considered as an ‘unequal’ policy measure which discriminates between workers with high levels of skill/education and those with low levels of skill/education, always resulting in higher rate of unemployment” | | 1411 8794 | 02/11/2015Word Count: 1, 522 |

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The statement presents discriminatory issues of minimum wage between those of a higher or lower skill and education, which results in an increased rate of unemployment. It is assumed that, through minimum wage, lower and higher skilled workers are paid equally, rendering the education of higher skilled workers redundant. Higher skilled workers would be more partial to higher paying jobs than that of minimum wage, which consequents higher unemployment. Unemployment results in a number of economic issues as production possibilities are not fully realised. For instance, had workers been employed, there would not be a loss of output produced; this is known as Opportunity Cost. This essay shall cover points concerning minimum wage, occupational choice, return of investments in education, and human capital.
The implementation of minimum wage directly affects employment rates especially low skilled workers, and young workers. The two most prevalent arguments are between supply side economists and demand side economists (Richardson IV, O. E., NO DATEa). "Economic consensus has long linked higher minimum wages with higher unemployment," according to the Wall Street Journal (WSJ, 2009), and supply side economists believe that, through increasing the minimum wage, unemployment rises, especially between young workers and low skilled workers. This is due to their inexperience and low skill; where smaller companies would prefer to employ higher skilled workers. Higher skilled workers are also affected due to their need to

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